Closing the Payout Gap in Germany’s Remittance Market

Germany is one of Europe’s largest and most mature economies, with a fully banked population and strong trust in its financial system. It is also one of the world’s largest remittance-sending markets, with outbound flows exceeding €20.4 billion annually.

Yet despite this scale and sophistication, the way those payments are delivered tells a different story. Around 80% of remittances sent from Germany are still paid out in cash, even as domestic payments increasingly move through bank transfers and digital channels.

In Germany, most people send money directly from their bank accounts. But in many destination countries, recipients use mobile wallets, local payment systems, or cash pickup instead of bank accounts.

This mismatch means banks can initiate payments but not always complete them in the format recipients need, pushing customers toward providers that can do so.

For German banks and PSPs, this creates both a challenge and an opportunity. 

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A digital economy with widespread remittances

Germany remains unusually cash-oriented for a highly developed economy. More than half of all purchases (51%) were paid in cash in 2023. And, with outbound flows of €20.4 billion and average costs of sending these payments around 4.5%, the German remittance market represents an estimated €900 million annual revenue pool.

Much of this value is captured outside traditional banking rails at the point of delivery – according to McKinsey, up to 65% of international P2P transfer value was captured by nontraditional providers in 2024 – reducing both fee income and customer ownership for German banks.

For banks, this creates a clear imbalance. They are central at the start of the transaction, but not consistently involved at the end, where value is ultimately captured.

The local reality: Remittance behaviour is shaped by corridors

The persistence of cash in Germany’s remittance market is driven by destination markets rather than domestic preferences.

Germany presents a distinct profile within Western Europe. Unlike markets where mobile wallets dominate, consumers remain strongly anchored to their bank accounts. This deep level of ‘Bankarisation’ is a structural strength, but it also creates a service-level paradox.

Once funds leave Germany, the delivery method is determined by the infrastructure in the receiving country.

This varies in practice:

• In EU corridors, payments are largely account-based, supported by SEPA
• In Turkey and parts of Eastern Europe, delivery is split between bank transfers, cash, and digital channels
• In many markets across Africa and South Asia, mobile wallets and cash networks remain central

Therein lies the mismatch. German banks operate on IBAN-based systems, while many high-value corridors depend on wallet or local payment rails that sit outside traditional correspondent banking.

A market without domestic remittance leaders

Germany’s remittance market is shaped as much by who participates as by how payments are delivered. Unlike other major sending markets, there are no dominant domestic remittance providers operating at scale.

Instead, international MTOs and fintech providers lead outbound flows, particularly in corridors where cash and wallet payouts dominate.

This creates a structural gap:

• MTOs control the last mile of delivery
• Banks initiate payments but do not complete them
• Customers switch providers to ensure reliable payout
• Value is captured at delivery, not initiation

For German banks, this means losing visibility, control, and revenue at the most critical stage of the transaction. Over time, their role shifts from full-service provider to funding source within a broader payment chain.

At the same time, this creates an opportunity. With access to global payout infrastructure, banks and PSPs can participate directly in remittance corridors rather than handing off the transaction before completion.

Where the friction sits

A remittance service is judged less by how efficiently it starts a payment, and more by whether it can complete it in a format the recipient can use.

If a gap exists between payment initiation and delivery, it affects both the end-user experience and the operational model behind cross-border payments.

Consumer experience

For individuals sending money abroad, the process is often less predictable than domestic payments.

• Cash pickup remains common across key corridors
• Fees and FX are not always transparent, leading to reduced final amounts
• Settlement can take several days through traditional banking rails
• Delivery methods vary depending on destination

Even when a payment starts digitally, the outcome can still feel manual and uncertain.

B2B, PSP, and platform operations

For banks, PSPs, and platforms, the challenges are structural rather than user-facing.

• Different payout methods require separate integrations
• Liquidity is spread across providers and regions
• Expanding into new corridors increases operational complexity
• Managing bilateral relationships across markets does not scale efficiently

This creates a fragmented operating model, where each new corridor adds cost and overhead.

A structural constraint, not a demand issue

These challenges point to a broader issue. Demand for cross-border payments is not the limiting factor.

The constraint lies in how funds are routed and delivered across different systems. Without consistent access to payout endpoints, even well-initiated payments cannot be completed efficiently.

Enabling German banks and PSPs to access remittance corridors

The limitations outlined so far are not caused by a lack of demand or liquidity. They stem from the difficulty of accessing wallet networks, local payment systems, and cash alternatives across international markets. For German banks and PSPs, this has historically meant relying on third-party providers to complete the final stage of delivery.

This is where the model shifts.

Thunes addresses the core challenge in Germany’s remittance market by connecting traditional bank payment flows to the payout systems that complete the transaction. 

Bridging systems through a single integration

Thunes acts as an interoperability layer between Germany’s banking system and the diverse payout methods used across global remittance corridors. 

Through Swift connectivity, institutions can now deliver instant payments to mobile wallets, stablecoin wallets and bank accounts via the Thunes Direct Global Network with no new messaging protocol required.

• Reach across 140+ countries and 90+ currencies
• Delivery to mobile wallets, stablecoin wallets, bank accounts, and local payout methods
• Access to billions of endpoints across global remittance corridors
• Preservation of rich ISO 20022 payment data across systems

This removes the need to integrate separately into each destination system

Handling complexity through translation

In cross-border payments, the challenge is not simply about moving funds but about translating between different systems. Payment instructions must be adapted to local protocols, regulatory requirements, and payout formats across markets.

Thunes manages this translation layer by:

• Converting Swift messages for local RTP systems and wallet APIs
• Applying jurisdiction-specific compliance screening
• Optimising FX conversion in real time
• Maintaining data integrity across the transaction lifecycle

This allows banks and PSPs to operate across incompatible systems without managing that complexity directly.

Infrastructure that supports execution

This model is supported by two underlying components:

• SmartX Treasury System manages liquidity, FX, and pricing in real time, helping ensure that the amount sent matches the amount received
• Fortress Compliance Platform embeds regulatory checks and monitoring into each transaction, supporting cross-border compliance requirements

Together, these systems handle the operational complexity that would otherwise sit with the bank or PSP.

What this means for banks and PSPs

For German banks and PSPs, closing the payout gap changes their role in the remittance value chain.

Instead of acting only as the starting point for payments, they can participate in the full transaction lifecycle, from origin to delivery. This shifts cross-border remittances from a pass-through service to a source of revenue and customer engagement.

For banks, that means:

• Greater participation in high-value remittance corridors
• Retention of fee and FX revenue that would otherwise move to third-party providers
• A more consistent payout experience across markets
• Reduced reliance on cash-based delivery methods
• Simpler expansion into new corridors without building local infrastructure

It also strengthens the primary banking relationship. When customers can initiate and complete international payments within the same environment, there is less need to switch to alternative providers.

Closing the gap

Germany’s remittance market highlights a clear structural gap. Payments are initiated in a highly developed banking system but are often delivered through fragmented, cash-based networks.

That gap is no longer fixed. With access to global payout infrastructure, banks and PSPs can extend beyond account-to-account transfers and deliver funds in the formats recipients actually use.

For institutions willing to act, this is an opportunity to reclaim participation in cross-border flows and turn remittances into a more meaningful part of their business.

Learn how Thunes expands payment access in Germany through the Direct Global Network.